2008 was a very interesting and important year for Behavioral Economics.

For many years, the common reaction to the experimental evidence showing different types of irrationality was that these irrationalities will “go away” when dealing with professional people, dealing with a lot of money, and of course acting within the competitive environment of the market.

While I never understood the intensity of beliefs in these arguments, it was not really possible to test these assertions — so this remained an academic debate.

In 2008 when the markets failed is such a miserable way, it became clear that rationality was not just playing a role in “regular” peoples’ lives, and that it was also a part of professional sector and our institutions. Now irrationality became much more interesting to the general audience, business, and even policy makers.

Predictably Irrational was first published in February 2008, and given the relative ease of modifying books these days, I decided to add some of my reflections on the stock market crisis — and create an expanded edition of Predictably Irrational. Once I decided to add some material, I also realized that I have learned some new things in the last two years about some of the original chapters in Predictably Irrational, so I added some material about these topics as well.

The expanded edition will come out on May 19th, with a somewhat different cover (see below), more material, and also with a more aggressive stand against rational economics.

I am looking forward to the reactions to this version, and in particular to the criticisms from rational economists.

How do we match the ease of update by author with a corresponding ease of update by consumer? Any chance of making some of the new material available as downloads for those of us that bought the original book (in paper or on the Kindle)? Or perhaps the Kindle store could display a different price for books when an earlier edition was present in the customer’s digital library….

I am not an economist but a participant in economy- as a marketer, a consumer a recipient of several marketing messages.

My belief is that we behave irrational because we deal in non commoditized world.
If one were to deal in a commodity say loose rice or wheat (sans brand), would the trading parties not behave as the economists have foretold. Ultimate destiny of any product or service is to become a commodity. Branding delays the inevitable hence the irrationality, which is not only expected but also warranted.

I also believe that when we are dealing with free goods we are ignoring the fact that marginal utility of money stays constant. If we assume that the marginal utility of money increases abnormally, we can account for the irrationality associated with free goods.

hope to hear from you. I was surprised to see the expanded edition of the book. It’s definitely not fair to those who have already purchased the first version. Imagine how much paper will be wasted if we buy the newer version too :)

please make the additional chapter that contains material on the chapters of version 1 available separately.

It seems odd that the publisher would not offer a Kindle option for the revised edition given that a Kindle edition was initially available. But then again it may be predictably irrational … or just a problem between the publisher and Amazon.

Heard you on CBC, borrowed the book — lots of wonderful insights, useful for teaching and self-reflection. During the radio interview, you mentioned the material on honesty, with the exercise of remembering the Ten Commandments. I haven’t looked at the revised edition, but I wonder if you’ve had other comments (sorry, I’m late to the party), or if your editors at HarperCollins noticed: the list of the commandments in the Appendix to your Chapter 11 omits one of them (No graven images) and doubles up another (Coveting). If they haven’t made this change, your publishers might want to check Exodus 20 just to confirm. It’ll keep them honest. :-)

Your book really made me very interested in behavioral economics. Sadly, luck isnt on my side. Where I come from, behavioral economics is not very established. Hence, despite my interest, i will not be taking Economics in university. Living proof that luck is important!

I just read the first edition and I almost burst out laughing when I saw this post. Wonder how the books will be advertised “Original Edition – $16″, “Original Edition PLUS 2 additional chapters – $16″.

I guess I should have procrastinated, LOL. Glad I didn’t, though. I have, as a result of many years of AA meetings, identified many and, in a few cases, corrected my “character defects”. What made reading the book particularly worthwhile for me was learning that we alkies do not have a corner on the market as far as irrational behavior goes. Very enlightening, thank you.

1, If Charles II had ruled England from 1630 (p188), it would have constituted a coup, since his father was not beheaded until 1649.
2. If one goes onto the New Scientist wensite and gives the keyword Placebo, it will show a massively interesting article on placebo effects, including manipulations where pharmacologically active medications are administered with the recipoient told they won’t work. The nugabo effect?
3. I wish ethics committes were as permissive with me as they obviously are with Dan Ariely!

I’ve just finished your expanded edition and found it interesting and instuctive. I hope you will follow it up with future studies.

One change I suggest is to get a broader cross section of the population. I’m not sure the results of studies with Ivy League college students as their only subjects can be applied to society as a whole. In fact, the one case history I found most interesting and relevant was one you probably didn’t intend to include as a study. It was the story in the “thoughts” section about your experience with an insurance company.

As a writer and teacher of economics, you of all people, should know the importance of consumer action in the functioning of a capitalistic economy.If, for example, people decide it’s too much trouble to drive two blocks out of their way to save a nickel a gallon on a tank of gas, there is no incentive for sellers to keep prices down.
I personally see it as not only my right to seek out the best deal I can, but also my duty as a consumer in this economy to help insure it functions as it should.

I believe you were gravely derelict in this duty in your utter surrender to the outrageous actions of your insurance company. I find it ironic that a few pages after this story you described a study on dogs trying to deal with electric shocks. I couldn’t help but think of your dealings with Sheila as I read about the ‘yoked’ dog in his corner.

I think you underestimate how many insurance companies are out there vying for your business and the benefits you could have realized with a little more effort. And even with the same terms, you should have taken your business to another, hopefully closer, company and told your old insurer why. If they are not made aware of repercussions for their terrible behavior they will never change.You may have felt like you had no control over the situation, but I assure you that is not the case. I have stood up to the likes of AT&T, American Airlines, and Bank of America and come away withacceptable concessions every time. More importantly, I have come away feeling better about myself. You will too.

I’m a big fan of your book and behavioral economics. I know a economics professor at the University of California Irvine (Richard McKenzie) who is coming out with a book called Predictably Rational. Any chance we can arrange a debate of your various arguments for us behavioral economics fanatics?

Perhaps two debates are in order, one on our ground here in Southern California, and another on your ground in North Carolina. I would be willing to arrange a meeting with McKenzie if you are interested. Who knows, perhaps this “event” will help sell some books.

Having purshased the audio edition, it makes it even more difficult to determine what was revised and what was updated. What a shame; I really enjoyed the book, found the material interesting, informative and practical, it is a pity to loose lose a gem or two, perhaps.